Randy Hillier: Tie government wages to economic performance

Don Drummond and his commission have now unveiled their highly publicized report on what the Ontario government must do to return the province to fiscal prudence. Their recommendations are provided with a gloomy impression that our day of reckoning is upon us. If Ontario continues with the status quo, the province is headed to bankruptcy.

The report contains suggestions for finding efficiencies through centralization and amalgamations, rather than reductions of government spending. Their recommendations do not, however, argue for many structural changes to discourage imprudent expenditure. Although the report calls for a more efficient bureaucracy, Drummond ignores the inalienable fact that governments are inherently inefficient.

So I’ve got a 363rd recommendation to add to the Drummond Report. Let’s tie government wages to economic performance and fiscal prudence.

The first lesson that you learn in Economics 101 — and in life — is that incentives matter to people. The activities of legislators and civil servants have enormous direct and indirect effects on the economy and wellbeing of Ontario; but these people are never affected by the consequences of their policies. Unlike the rest of Ontarians, who get paid based on how well they do their job, these bureaucrats and MPPs receive pay increases regardless of their performance.

And how has the government’s performance been? Abysmal at best. In the eight years since Dalton McGuinty and his Liberal government took power, Ontario’s net debt has nearly doubled to $217-billion. Our real GDP per capita is only $347 higher than when McGuinty took office, our unemployment rate is nearly a full percentage point higher and our yearly deficit is $16-billion. But it’s not all doom and gloom for every Ontarian: Since 2003, the wages of MPPs have risen about 10% in real terms from $85,000 to $116,000. Unionized public-sector employees have seen a similar increase.

So ask yourself and Don Drummond why would you expect politicians and public servants to find efficiencies? Life keeps getting better for them regardless of how well or worse off their constituents are.

The formulas and indexes used to establish public sector and politicians’ wages ought to be simple and easy to understand. Linking wages to real per capita GDP growth and changes in the deficit would provide the needed performance incentive and a reasonable wage formula, while preventing government from falsely inflating GDP through deficit spending. Consider: In the eight years the Liberals were in power, the real GDP per capita of a citizen of Ontario only increased 0.84%, but taxpayers were saddled with another $100-billion in debt.

If we hope to ever find the efficiencies Mr. Drummond has made clear we so desperately need, we will have to put incentives in place for our public service to recognize their significant role in our economic performance. Would public servants be so quick to obstruct your building permit or business license if doing so affected their own pay cheques, not just yours?

Under my proposal, all public servants would see the connection between their pay cheques and Ontario’s economic performance. Politicians and bureaucrats would have to carry the burden of their policies.

Unlike most people, I have a job that pays me a healthy wage regardless of the economy. I’m not subject to layoffs, firings, or work shortages, except once every four years. There is no clock for me to punch and I’m free to work as little or as much as I desire without additional reward or consequence. That’s not right. I want to be treated the same as those who pay me. Even if that means I end up with a pay cut.

National Post

Randy Hillier is the Progressive Conservative MPP for Lanark, Frontenac, Lennox and Addington.